Is your PPF or Sukanya Samriddhi account at risk? Here's what you need to know

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Subscribe to enjoy similar stories. India’s small savings schemes, long cherished for their high interest rates, are under the scanner. The government has announced a strict crackdown on irregular Public Provident Fund (PPF) and Sukanya Samriddhi Account (SSA) accounts, stripping them of their attractive 7.1% and 8.2% interest rates.

Instead, such accounts will either earn no interest or a reduced 4% Post Office Savings Account (POSA) rate, depending on the violation. This clampdown affects those who have opened multiple accounts or flouted the rules governing small savings schemes. Here’s what account holders need to know.

The government’s decision impacts PPF, SSA, and other small savings accounts that were opened in violation of the National Small Savings Scheme rules. While individuals are only allowed one PPF or SSA account per PAN, some have managed to open multiple accounts through different banks or by combining a bank and post office. These additional accounts are now being declared irregular, with interest benefits revoked retrospectively.

In essence, what once seemed like a loophole for higher savings is now turning into a costly oversight. Several other conditions can also invalidate your small savings accounts, including minor PPF accounts opened with an incorrect or unauthorized guardian. Even joint PPF accounts with parents could be affected by these rules.

Multiple accounts: If an individual holds more than one PPF account, all except one will be considered irregular. The holder must designate a primary account, and the balance of any second account will be merged into it. For third and subsequent accounts, no interest will be earned from the date of opening.